Plot owners move HC on RERA making them co-promoters

The owners of a three-acre plot on the Goregaon-Mulund Link Road, Mulund (W), have moved the Bombay high court challenging a circular issued by the state authority under RERA, which makes plot owners co-promoters in a real estate project.Rosy Sequeira | TNN | July 30, 2017, 09:13 IST

MUMBAI: Can a housing society or plot owner be held responsible for violations or irregularities committed by a developer under the new Real Estate (Regulation and Development) Act?

The owners of a three-acre plot on the Goregaon-Mulund Link Road, Mulund (W), have moved the Bombay high court challenging a circular issued by the state authority under RERA, which makes plot owners co-promoters in a real estate project.

The May 11 office order issued by the Maharashtra Real Estate Regulatory Authority has notified that any owner or organization which signs a development agreement with a builder will also have to register with RERA and will be treated as co-promoter of the project. It says this is because the owner will be entitled to a share of total revenue generated from the sale of flats or total area developed. It also states that liabilities of such a co-promoter will be at par with that of the promoter of the project.

The owners had ente red into an agree ment with Shiv Krupa Enterprises in December 2014 to develop the property. Thereafter, the owners and the developer entered into agreements in 2011 for sale of flats in three wings of Sristi Oasis Complex with flat purchasers. Being aggrieved that now even owners of land are required to register with RERA, the owners moved the HC saying the order is without jurisdiction as the Authority has sought to amend the word “promoter“ as defined under Section 2 of RERA, which is impermissible. “The impugned order is thus a classic pick of the power of the Parliament which alone has jurisdiction and powers to amend the statute,“ their petition states.

It also states that the definition of promoter under RERA clearly shows that only a person acting himself as a builder, colonizer, contractor, developer, estate developer or by any other name or claiming to be acting as the holder of power of attorney from the owner of the land is a promoter.“Thus, an owner of land, who is himself not developing the land, is obviously not included in the term of promoter,“ it adds.

The petition says the Authority by notifying the definition of “co-promoter“ foists a liability on the owner which was never contemplated either under Maharashtra Ownership Flats Act or RERA and only "promoter" is defined under both acts. Even Parliament chose not to add the definition of co-promoter in RERA, it adds.

The petition has urged that the high court direct the Authority to withdraw or cancel the order, to hold that it had no jurisdiction to pass the order and quash and set aside the order and pending hearing and final disposal of the petition, to stay it. On Friday, before a bench headed by Justice Anoop Mohta, the petitioners' advocate Vishwajeet Kapse sought an urgent hearing. “The Authority has no jurisdiction to amend the Act,“ he said, informing that July 31 is the last date for registration under RERA. The judges then posted the hearing on July 31.